Listed legal business’s share price crashes after gloomy results


Stock exchange: All-time low price

Shares in listed legal services business RBG Holdings nearly halved in early trading this morning after it announced another 7% fall in turnover and a £5.7m loss for the first half of the year.

It also predicted that the full-year results would be “significantly” below market expectations.

The 45% drop in the share price, to an all-time low of just 3.25p, comes despite the company – which owns London law firms Rosenblatt and Memery Crystal – announcing £4.5m of costs savings to steady the ship.

RBG’s share price hit a high of 148p in June 2021 but has been falling ever since. It started 2023 on 64p and then dived to 10.25p last December after it warned about upcoming poor results for 2023, which were finally unveiled in May as a 14% fall in revenue.

Group revenue in the six months to 30 June 2024 was £18.4m, £1.4m lower than the same period in 2023, with the loss before tax of £5.7m – three times that of a year before – in part due to non-recurring costs of £2.9m attributable to “restructuring of the business to lower costs and refocus on legal services”.

The £4.5m reduction in costs was achieved by surrendering the lease on Rosenblatt’s former St Andrew Street headquarters, “a targeted headcount reduction in all areas of the business”, and re-tendering various outsourced services.

“We expect the benefits of this cost-cutting to filter through to EBITDA and profit before tax in H1 2025 and allow us to reduce debt.” Net debt was £24.3m, an increase of £1.4m on six months earlier.

The AIM-listed group had a difficult 2023, including selling its litigation funding arm, LionFish, and writing off all of its contingent work.

This year, it raised £2.8m in funding from shareholders and sold Convex Capital, its sell-side only M&A advisory firm, to a management buy-out backed by another listed law firm, Knights, for an initial £2m, with a further £600,000 contingent on the completion of certain transactions.

Today’s announcement said: “While new business pipelines are improving across the board, there is a natural time lag before translating into material improved revenue.

“The focus on cost reduction means the company is within budget on costs and whilst trading in September has shown encouraging signs of improvement, trading conditions for the rest of the financial year remain difficult to predict.

“Accordingly, the board now expects that the group performance for FY 2024 will be significantly below market expectations.

Chief executive Jon Divers added: “As well as reducing cost, driving the organic growth in our legal services businesses – Rosenblatt and Memery Crystal – is at the heart of our plans. In 2023, we recruited seven new partners with another two joined in in the first half of 2024. Each partner creates more revenue opportunities for the Group.

“The group is now a much leaner, and more efficient business with opportunities for organic growth through our new partners. We look forward to returning the business to profit and restoring shareholder value.”

In his report, chief finance officer Kevin McNair said the average number of employees across the Group was nine lower than the same period last year, at 192.

“The reduction is primarily attributable to the redundancy exercise undertaken by the firm in H1 2024. During previous periods of strong revenue growth and high business activity, the group increased its headcount to meet demand. However, as business levels normalised, it became apparent that the form was carrying more staff than necessary for the available workload.

“Consequently, the group made the difficult decision to reduce headcount to better align with its operational needs.”

Lock-up at the group has improved, meanwhile, from 152 days to 125.




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